National Editor

About two weeks after filing a shelf registration statement to sell up to $250 million in securities, Myriad Genetics Inc. is raising $57.3 million through a pursuant offering of 3 million shares of stock.

Salt Lake City-based Myriad, which will have 26.9 million shares outstanding after the transaction, said it will use the proceeds for general corporate purposes, including trials and development of its predictive medicine products.

Myriad's stock (NASDAQ:MYGN) closed Friday at $18.71, down $2.68, or 12.5 percent.

"We've had a good run-up in our stock lately," said William Hockett, vice president of corporate communications for Myriad. "Investors see additional shares out and they think of dilution, but Myriad has very few shares out relative to its peers or anybody in the biotech industry close to its size."

David Webber, biotechnology analyst with First Albany Corp. in New York, said the company might wisely use the cash to boost its drugs.

"My feeling is that they're still doing fine with their predictive medicine tests," he said, but the "big hope for growth" lies in therapeutics, and that line "seems to be moving more slowly than I expected."

Webber added he maintains a "buy" rating on the stock, "so I'm still positive and optimistic," but couldn't justify a strong buy, based on what he called the "pipeline's sluggishness" in a research note earlier this month.

"Nothing much has changed," he said.

Hockett said Webber is "not alone" in hoping for more alacrity.

"We'd like to see it move along faster, too," Hockett told BioWorld Today. "But this isn't the time to rush things. It's the time to get it done right."

Myriad's most advanced product is Flurizan (MPC-7869), licensed from Encore Pharmaceuticals Inc., of Loma Linda, Calif., in December 2000, which is in Phase II/III trials for early stage prostate cancer. The compound is a proprietary component of the marketed non-steroidal anti-inflammatory drug flurbiprofen, sold under the brand name Ansaid by Pharmacia Corp., of Peapack, N.J.

"It's generic now, but [neither Ansaid nor the generic version is] exactly the same" as Myriad's drug, Webber said. "In the prostate cancer setting, the advantage is supposed to be that Flurizan lacks the gastrointestinal side effects and has antitumor effects."

The Phase II/III trial is expected to take four or five years, with Flurizan potentially reaching the market in 2007 or 2008, and the drug is being investigated for Alzheimer's disease as well.

At the same time, Myriad is growing its line of five predictive medicine products, having shown $7.9 million in sales for the recently reported fiscal quarter ending Sept. 30, a growth of 43 percent from the previous year's period. Gross margins on the predictive medicine business reached a new high and Myriad had approximately $104 million in cash and investments at the end of the quarter.

At the current burn rate, Hockett said, "we would have been able to continue for at least three years, although as you consume that cash you feel less and less comfortable with funding things that might come up, and we want to be able to do those things."

Sales are increasing steadily of the company's BRACAnalysis predictive medicine product for breast and ovarian cancer, as well as Colaris for colon and uterine cancer. Myriad also has a test for hereditary melanoma and pancreatic cancer, called Melaris, and in development are tests for prostate cancer susceptibility and diabetes.

"The story is pretty well understood amongst investors," Webber told BioWorld Today. "It's really a choice of whether you will value the product completely on the diagnostic business, or also accord some value of the therapeutic pipeline."

For several years, Myriad has been promising - and doing - more work on drugs, "but they've also said in the past that they intend to develop additional diagnostic tests," he added.

Said Hockett: "We're worth every penny in our predictive medicine business alone, and that's without using an excess multiple in earnings. All the drug development is upside right now, but I'd like to see some of it being factored in current value and potential. We have 15 candidates in preclinical testing and two in the clinic, and two more very close to entering the clinic."

In late October, Myriad said it had discovered the novel obesity gene HOB1, mutations in which apparently increase function rather than lessen it, which is viewed as good news since research on blocking a drug target has proven mostly easier than trying to renew function.

The company, founded in 1991, combines varied gene discovery and therapeutic target identification, including analysis of Utah genealogy databases, protein interaction network analysis and advanced bioinformatics, including mapping, sequencing and cloning technologies.